The Bank of Japan has sent a subtle signal, avoiding a commitment to raise interest rates before its April meeting.

The Bank of Japan (BOJ) avoided fueling market expectations of a rate hike this month by maintaining a highly nuanced signal in its two quarterly regional economic reports. In another press release summarizing the views of its branch governors, the BOJ stated that looking ahead, amid increased uncertainty, there are concerns about rising prices, particularly energy prices, and their negative impact on corporate profits and private consumption. This commentary suggests that the BOJ is reluctant to commit to a rate hike just three weeks before its next interest rate decision on April 28. Based on overnight swap market pricing, as of Monday, traders considered the probability of a rate hike this month to be around 66%, as the Iranian war could pose a greater upside risk to Japan's already persistently high inflation. The BOJ also stated that many reports indicated businesses continue to pass on rising costs such as labor and logistics to selling prices. Meanwhile, businesses continue to combat consumer inflation fatigue by limiting price increases and strengthening their lineup of low-priced products. (Jinshi)